Italtile manages to increase sales despite weak economy
Italtile chair Giovanni Ravazzotti says challenges will continue unless consumers’ disposable incomes improve
Tile and sanitaryware manufacturer Italtile said on Tuesday weak trading conditions persisted in the first five months of its financial year as consumers took strain from the weak economy.
The poor economic conditions, the price sensitivity of consumers, increased competition and low consumer discretionary spend typically exert pressure on Italtile’s margins. The owner of the Italtile Retail, CTM and TopT brands in September said that its sales would be constrained in the current financial year.
In a sales update, Italtile said total retail store turnover in the first five months of the year increased 7%, compared with the previous corresponding period. Retail store turnover is the aggregate turnover of all stores, either corporate or franchised, in the group’s retail network.
Manufacturing sales for the review period grew 7.6%. Manufacturing sales refer to sales related to Ceramic Industries, the tile and bathroomware manufacturer in which Italtile holds a 96.47% interest and Ezee Tile Adhesive Manufacturers. Italtile has a 71.54% interest in Ezee Tile.
Ceramic and Ezee Tile sales are referred to as “manufacturing” sales to distinguish them from “retail” sales reported by Italtile’s retail brands — CTM, Italtile Retail and TopT.
“Weak trading conditions persisted over the five months, as consumers continued to experience financial hardship in the current adverse economic climate. The group’s sales trended positively [in the five months], with stronger results reported for the second half than the first half of the review period,” Italtile said.
The group said CTM, SA’s largest specialist tile and bathroom retailer, recorded a positive turnaround and partly attributed that to increased efficiencies.
Italtile chair Giovanni Ravazzotti in September said that the company’s results for the first half of the financial year were expected to outperform those of the prior comparable period. But Ravazzotti — who found the company in 1969 — said the second half of the year is “particularly challenging” unless disposable income improves materially “and consumers who have deferred investment in their homes in recent years return to the market”.
Italtile’s shares were up 3.7% at R14 on Tuesday.